SERVING THE STATE SENATE 7TH DISTRICT

Headlines from this edition:

- Eliminating the State Income Tax…and the Senior Pension Tax- Arbor Hills Landfill Public Meeting- Michigan Public Service Commission seeking comments- Old Detroit House of Corrections bulldozed- Job Opportunities- An original Rosie the Riveter passes away- Upcoming Office Hours

ELIMINATING THE STATE INCOME TAX…AND THE SENIOR PENSION TAX

The citizens of many other states benefit from having no income tax. While it is easy to declare reasons that can’t happen in Michigan, the reality is that political choices and policy largely determine what is possible. Sen. Colbeck recently laid out one path to get the state there and what it would mean for Michigan. You can read his editorial in the Detroit News by reading the content below.

“Michigan annually collects a net of $9.7 billion in personal income tax payments. Wouldn’t it be nice to make that $0 and join the other states that no longer require its citizens to file income tax forms?

Oh, I know the response of the naysayers: “That’s impossible.” But it’s not if we prioritize the best interests of all of our citizens over those of special interests. Some policy makers understand tax incentives can be good, but only seem willing to do so when it benefits some special interest like data centers or developers of “transformational brownfield projects”. When it comes to everyday citizens, however, these same policy makers are more than willing to increase tax burdens on our households, as was the case with the Senior Pension Tax and recent gas tax and registration fee increases.

So how can we responsibly take the income tax (and the Senior Pension Tax) from our current 4.25 percent down to zero? By incrementally decreasing the state income tax based upon the achievement of specific expense reduction and economic growth milestones and keeping whole the funding for priorities such as schools and road funding as we do so.

Let’s start with delivering the largest line item in the state budget more efficiently. Medicaid is the single largest line item in the annual state budget at $17.7 billion. If we were to offer Direct Primary Care Services (DPCS) as the preventive care component of Medicaid coverage, we could save taxpayers a minimum of 20 percent while improving the care received by Medicaid enrollees. The taxpayer savings would be over $3.5 billion once fully implemented. If the federal government would provide annual lump sum Medicaid block grants based on current expenditures, all $3.5 billion would be credited to the state. Extending DPCS to public employees would save another $280 million leaving us with a balance of $5.8 billion to cover with the income tax. These reforms alone could lower the income tax rate from 4.25 percent to 2.58 percent.

How about building higher quality roads? Investing in pavement technology that costs 15 percent more upfront but results in roads that last four times longer would not only reduce the frequency of orange barrels on our roads but would also save taxpayers close to $770 million per year on road maintenance costs. Once all roads have been upgraded, we could reduce the state income tax to 2.24 percent.

Our pro-growth policies over the past six years have helped create almost 500,000 new private sector jobs. We would stimulate another wave of job growth, especially in small businesses, by eliminating the state income tax. Each job created results in $1,139 in additional state tax revenue and reduces the state welfare demand by $5,648 for a net gain of $6,787. Once we add another 500,000 jobs with pro-growth policies, we could cut our income tax rate to 1.37 percent.

We are now in striking distance of eliminating the income tax. Let’s keep going. If we were to replace special interest-driven economic development policy with broad-based economic development policies like the elimination of our state income tax, we would free up $663 million per year in MEDC tax credits and another $336 million per year in Michigan Strategic Fund grants. We could cut our state income tax to 0.93 percent. We now need another $2.1 billion in savings to reach our goal.

For the sake of this exercise, let’s attempt to forgo the typical disingenuous cries of “Draconian cuts” and assume that we cannot find another $2.1 billion in savings (a 3.7 percent cut) in our annual budget. We’ve all heard the standard “eliminate waste and fraud” line from politicians with very few specifics. I would like to provide a very specific example of fraud that should be eliminated. Have you ever heard of a “zapper?” Most law abiding citizens have not. If you live in southeast Michigan, you may recall a news story about how La Shish restaurants diverted $20 million of taxable income to fund Hamas. They perpetrated this diversion using what is called a “zapper” in their point of sale system. Without going into too much detail about this technology in this article, suffice it to say that Michigan sales tax revenues are annually shorted an estimated $1 billion due to fraudulent usage of “zappers”. Simply by enforcing current sales tax law, we could take the state income tax rate to 0.49 percent and, for good measure, we can put an end to further diversion of funds to terrorist organizations like Hamas.

So far, we have shown how we could rationally take our state income tax from 4.25 percent to 0.49 percent. Only $1.1 billion in expense reductions remains in order to enable us to eliminate the Personal Income Tax. How do we close the remaining gap? In light of the observation that the remaining $1.1 billion gap is only 2 percent of our overall state budget, my preference would be to continue exploring opportunities for additional expense reductions. In support of this approach, if the savings realized by deploying DPCS for Medicaid enrollees were to actually be 23 percent rather than 20 percent, the gap goes to $0.

In the final analysis, we have merely scratched the surface of what can be done to maintain a fiscally sound, balanced budget while pursuing the elimination of the state’s taxation of our labors. All it takes is a resolve to do so on the part of our legislators and the governor. It is time to say no to the naysayers who have been ignoring the best interests of the majority of our citizens.”

ARBOR HILLS LANDFILL PUBLIC DISCUSSION

An issue that our office has been monitoring closely has been the odor complaints that many people who live around Arbor Hills Landfill have been having. Sen. Colbeck has discussed the problem with the Department of Environmental Quality (DEQ), and helped to identify and mitigate factors that have contributed to the smell. One of the biggest issues has been that while one company was operating the landfill, a totally different company operated the natural gas pipes associated with the landfill. This frequently meant that the landfill was not in a position to make the gas related changes they felt were necessary. This has now been changed, and the old company was forced to turn over gas related operations to the landfill company. Additional flares and new pipes are now mitigating factors to help properly address the odor complaints.

A pipe in need of work crosses underneath railroad tracks, and the state is working to make sure bureaucracy can be cut through while vital railroad infrastructure is protected and maintained as pipe work gets completed.

You can learn more about the pipe work and other issues regarding the landfill at a DEQ Question and Answer session on Wednesday, September 6th starting at 6:30PM at Northville Township Hall. To learn more, click HERE.

MICHIGAN PUBLIC SERVICE COMMISSION SEEKING COMMENTS

The Michigan Public Service Commission will hold a public meeting at Schoolcraft College in Livonia from 1-5pm on September 6th. The meeting is designed to take public comment on the development of an Integrated Resource Plan (IRP) structure that utilities would need to follow in their filings with the state. The IRP process is designed to identify and evaluate the different possible ways that the state can meet its energy needs.

This includes a newer program called “demand response” for which it will be particularly important to receive public comment on because it can involve things such as different rates at different times of the day, as well as voluntary programs that allow for utility control of certain high use devices such as air conditioners to help prevent brownouts. The Senator has concerns that such demand response programs can be used to increase electricity rates beyond what the free market would otherwise demand.

Comments can also be submitted by mail or electronically. The deadline is Oct. 6 for comments and Oct. 20 for replies to comments. Mail comments to Executive Secretary, Michigan Public Service Commission, P.O. Box 30221, Lansing, MI 48909 or email them to mpscedockets@michigan.gov. Be sure to reference Case No. U-18418 in all correspondence.

For more information about the MPSC, please visit www.michigan.gov/mpsc or sign up for one of its listservs to keep up to date on MPSC matters.

DETROIT HOUSE OF CORRECTIONS

The site once known as “DeHoCo” and its associated blight is now gone, and ready for a new developer and better purposes for the community.

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THE MICHIGAN STATE SENATE 7th DISTRICT

The 7th State Senate District proudly serves the following areas: Canton Township, city of Livonia, city or Northville & Northville Township, city of Plymouth & Plymouth Township, and the City of Wayne.